Osborne’s last roll of the dice before the 2015 general election and he lived up to his reputation of putting his party’s electoral chances first. Already dubbed ‘the blue rinse budget’ it is not being cynical to say that Osborne with his changes in pensions was blatantly wooing the voter that is more likely to vote - the older voter.
For some time now the debate on pensions has centred on people having to buy annuities and then being locked into them. So Osborne is reducing the limit on income drawdown with the limit being scrapped altogether. Of course this sounds totally reasonable, ‘trust the people with their own money’. It is worth asking however would this provide security throughout a person’s retirement or is it a gamble that will have the exact opposite effect?
This budget was aimed at ‘them that have shall be given‘. So measures on savings with the merging of cash and stocks, ISAs and the limit for tax-free savings raised to £15,000 from £11,520. But last year the savings ratio – the amount of their income people save rather than spend – fell dramatically. While this may be spun as a return of consumer spending confidence, it is also likely to be a sign of the increasing difficulty of making ends meet with the longest squeeze on real wages since the 1870s.
The Chancellor attempts to spin an economy that is recovering. His problem is that most of us do not feel it. The most recent YouGov polling for The Sun found that only 20% think their household financial situation will get better over the next 12 months; when we look at his own voters the figure only rises to 33%. He said the government had a long term plan to bring security and resilience yet even the Treasury’s own analysis shows that any new thruppenny bit pound coins they care to give the worst off are more than wiped out by their continued 20% VAT rate and other indirect taxes, and their attacks on tax credits and benefits. Those that can afford to save will do well – but there is nothing in this Budget that will help us get to more decent jobs and better wages that would enable more people to save.
The truth is that the Chancellor had nothing to say to people on zero hours, nothing for part time workers, and nothing at all for the working poor. As Ed Miliband said in his response, living standards have gone down, month after month, year after year.
George Osborne and Nick Clegg puff themselves up and boast that they have raised the personal tax allowance to £10,500 from April 2015. Yet as the Institute for Fiscal Studies says, one in six workers earns too little income to benefit in any way from these changes. The real impact on low earners is merely £56 a year. But guess what, if you are a higher earner, it will be a huge tax benefit.
If Osborne really wanted to help the working poor he’d raise the National Minimum Wage by £1.50 so that no-one earns below a Living Wage.
The Chancellor wants us to believe that there will be a sunny upland if only we stick with the Tories come the 2015 election. But the economy is only returning to its pre-recession level this year – 6 years after the crash! It is the longest ‘recovery’ in history.
Next week there will be a vote in the Commons on welfare spending across 26 benefits, including parts of the Universal Credit to be capped at £119.5bn from 2015/16. This will form part of the government’s new Charter for Budget Responsibility this autumn.
He also confirmed that in addition to the cuts this year and next, he wanted a permanent reduction of £1bn in public spending and will seek a Parliamentary vote on a Charter for Cuts to be locked in by legislation.
Forget the sunny uplands, here’s Cameron/Osborne’s Britain:
• 350,000 people going to food banks.
• 400,000 disabled people paying the Bedroom Tax.
• 1 million more people paying 40p tax.
• 4.6 million families facing cuts to tax credits
As Len McCluskey General Secretary of Unite said:
“George Osborne promised to get Britain building and making, but does little serious difference to address the nation’s chronic housing crisis, or help our kids into work or rebalance the economy away from a so-called ‘recovery’ fuelled by debt. Ordinary people will be underwhelmed by this budget but worse than that, they will be no better off.”